The collapse of the oil price can be an important signal for the markets
Oil shows some rebound Thursday morning after a collapse for 7.4% within the day. Begin the day with a $78.8, night Brent fell below $73. Trade tensions between the US and China created the General busy tone of the auction. In the middle of the day the negative was added by the OPEC on the production growth in this and next year. Later, Libya announced that it will soon be able to restore their supplies. Factor in Libya was the last straw, causing a major intraday prices collapsed from February 2016. Previously, this same factor allows oil to rise, despite the increased caution of market, but yesterday dramatically lost its importance.
The Russian ruble is relatively easy to react to the dynamics of oil. At the end of the day the USD / RUB pair rose to the levels of 62.40 (+66 kopecks). Almost half of the movement explains the dynamics of the dollar on the currency market, where the dollar gained against the Euro 0.6%. The pair EURRUB gained 27 cents to 72.83. Another proof of the extent to which reduced the impact of oil on short-term dynamics of the ruble.
However, in the case of prolonged decline of oil prices, the ruble will be difficult to avoid weakening, as too much of the economy is tied to energy exports.
The ruble able to access a small increase in the start of trading on Thursday, after some recovery of demand for risks in trading in Asia. However, we must not forget that soaring oil often scare the markets, causing sales of “earning assets” including the ruble.
Dynamics of oil in the next few days could set the trend of the market as a whole to reflect on which side the advantage: those who believe in maintaining a high growth rate of the world economy, or those who see signs of a slowdown.